Industrial Market in Inland Empire Improves

07.18.2011

In the second quarter of 2011, the Inland Empire industrial market posted over 6.6 million square feet of positive net absorption- the highest figure seen in the market since the second quarter of 2007

Industrial Market in Inland Empire Improves

7/18/11

In the second quarter of 2011, the Inland Empire industrial market posted over 6.6 million square feet of positive net absorption- the highest figure seen in the market since the second quarter of 2007, according to the Second Quarter Market Report by Voit Real Estate Services.

Voit reported that vacancy in buildings above 100,000 square feet was down to 7.75 percent for the second quarter of 2011, a significant decrease from 9.67 percent in the first quarter of 2011 and an even more substantial decrease from 2010’s second quarter rate of 12.13 percent.

“Year over year, vacancy in the 100,000 square-feet-plus range has descended 36 percent,” said Chenoweth. “A decrease of that size in just a year demonstrates just how rapidly this market is recovering.”

In buildings with less than 100,000 square feet, vacancy is down to 7.04 percent, down from the 7.63 percent in the first quarter of 2011 and a decrease of nearly 20 percent, year over year.

In addition, availability for buildings both above and below 100,000 square feet was 12.22 percent in the second quarter of 2011, lower than 2011’s first quarter rate of 13.03 percent and 23 percent lower than 2010’s second quarter rate of 15.86 percent.

“These substantial declines in vacancy and availability are resulting in more confidence in the market,” said Chenoweth. “We’re seeing speculative development in larger size ranges for the first time in three years, and there is more movement regarding transactions throughout the market as institutional capital is being deployed.”

Industrial sales and leasing activity for the Inland Empire market totaled 9.3 million square feet in the second quarter, a decrease from the previous quarter’s total. Average asking leasing rates in the industrial market continued to convey a stable trend, posting a triple-net rate of $.34 per square foot per month for the seventh consecutive quarter.

“As occupancy increases, lease rates will rise,” said Chenoweth. “We anticipate that real estate owners and buyers will remain cautiously optimistic for the remainder of 2011. As rising rental rates do not bode well for tenants, we’re advising tenants to take advantage of the current market and make deals now.”